Startup Opportunities in Health IT

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Health care, long ignored by VCs who didn’t understand it, is now so obviously broken that it can’t be ignored, Rock Health, the crusading seed incubator in San Francisco where I’m a mentor , has done a  study of VC-funded healthcare startups. According to Rock Health’s survey, which is admittedly incomplete, 35 companies have received $2 million or more in funding in 2011 alone. But that’s only 2% of the startups. The rest, we can assume, are bootstrapping in one way or another. And although 2011 shapes up to be a record year in venture funding for the segment,  surpassing the previous record year 2010, much remains to be done.

Of the interviewees, 51% are in the business-to-business area (business to consumer health sites such as Wellsphere and WebMD having sprung up ten years  ago and already consolidated that space). This year, I see a great emphasis on personal health monitoring, on remote patient monitoring, and on connections between doctors for clinical decision making. There’s also a push to be mobile.

And yet the bulk of the work in transforming the industry has yet to be done. In the early days of electronic health records, a few major players — Cerner, GE, and McKesson — became entrenched in hospitals, providing ERP systems that did things like bar codes and inventory management, critical care bedside monitoring systems and claims processing. Those players, already in the hospitals,  also developed the early EHRs.

Those few players, with their expensive, proprietary systems, are still in place in most hospitals. As a result, patient data is siloed inside the hospital. When I had my hip replaced in 2006, I had to check into the hospital in advance. I filled out a series of paper forms at one end of the hospital. I was then required to take some preliminary blood tests, and I had to walk to the other end of the hospital, where the labs were located, and fill out the same forms. I filled them out again in the surgeon’s office, and again at the physical therapist.

My surgeon had to use the same costly EHR software the hospital uses in her office to make it possible for her to communicate with the hospital, and then another piece of software to read my outpatient X-rays, and still another software product to get the lab results.

When I returned to the care of my family doctor, who didn’t have any of the same software,  so the information transfer reverted to fax machines and hand carried X-rays.

Why? Because the Amazon and the Google of health IT don’t exist yet. Google tried and failed to get into the health care market, and Amazon is smart enough not to try.

As a general rule, hospitals buy separate pieces of software that don’t talk to each other. The problem is intensified by privacy regulations that few people fully understand. These regulations were designed to protect the patient, but the net effect is to make the transfer of information between health care providers almost impossible without paper files. In his day and age, that’s shameful. Even Kaiser Permanente, one of the pioneers in integration within its own hospitals, doctos, and patient population, has a system that can’t talk to the outside world.

Here’s what that means for you:

You go to your family doctor, and he will now have an electronic health record, because the government is incentivizing him to put one in.

His electronic health records software may or may not “talk to” the hospitals he practices at, or the labs he sends you to

If you are referred to a specialist, he may not even have an electronic health record, but if he does, odds are it’s not the same one your family doctor has, and—you guessed it — the data doesn’t transfer from one system to another.For you, it means your doctor will receive a copy of the specialist’s records by fax, or hand carried by you.

If you go to a hospital, when you leave, you will have paper discharge instructions, and your doctor may or may not get a report. Chances are, he will have to ask the hospital for one, and you will have to fill out forms to give him access to the reports. In fact, you will have to sign multiple forms just to get your OWN report, and when you do, it will probably be paper.

Lack of information sharing leads to redundant data entry, which takes up critical time.

Can you see the opportunity here? Health IT experts call it “Continuity of Care,” and are trying to set up regional “Health Information Exchanges,” so that if you happen to move from one city to another, change insurers, or change providers, your data can go with you.

But these are in the dark ages, because the acceptable standard, HL7 (or maybe by this time is is HL8) doesn’t do the job. The big entrenched players appear to have done everything they can to protect their market share my making it as difficult as possible to export or import information from their systems. Even at Rock Health, where awesome innovators are committed to changing the system, everyone is touching only a piece of the elephant.

So where’s the big opportunity in health care these days? I think it’s in data transfer and data sharing. If you think about how the internet has made it possible to share all kinds of other data, such as consumer sentiment, political opinions,  even energy use through the common TCP/IP standard, you realize how far health care has fallen behind.I am anxiously awaiting the day when your own health data moves with the same fluidity as data about your car, or data about your spending habits.

Tagged as: EHR, Electronic health record, Health, Health Care, Health information exchange, Health information technology, health it, Medicine, San Francisco, United States, WebMD